How does a business credit card balance transfer work?

Business credit cards can offer a great way for businesses to get off the ground. If you're carrying a balance, however, you may find yourself dealing with potentially high interest rates. If this is making it harder for you to pay off your debt, you may want to look into a business credit card balance transfer.

What is a business credit card balance transfer?

A balance transfer is just what it sounds like — transferring your debt, or balance, from one credit card account to another. People primarily seek out balance transfers when the card they're carrying a balance on has a higher interest rate than the one they'd like to transfer the balance to. Moving your debt to a card with lower rates may make paying the balance off easier. 

There are some limitations of balance transfers to be aware of, though. For instance, many issuers require you to pay a balance transfer fee. This will vary among cards, but it's often around 3%-5% of the total transferred. Additionally, be aware that if your balance transfer card has a low limit, you may not be able to transfer your entire balance. Finally, balance transfers cannot be made between credit cards issued by the same financial institution. 

If you're a small business owner and have been putting business expenses on your personal credit card, you may be wondering if you can transfer personal credit card debt to a business card. The answer is yes, you can. The process is very similar to balance transfers between personal cards.

Steps to make a balance transfer to a business credit card

The process to make a balance transfer to a business credit card requires a handful of steps. 

• Research cards: Before you do anything, spend some time researching your options. Even if you have an excellent credit score and qualify for most business cards, you will want to make sure you're choosing one that meets your needs. First, you may want to check different promotional offers of cards with 0% intro APR on balance transfers. You may also want to research each card's balance transfer fees and policies. Plus, if you're planning to use the new card on a continuous basis for your business expenses, read up on the different rewards and benefits available. 
• Apply for a card: It helps to be aware of your credit score when applying for a new card, and choosing one that best suits your score may give you better odds at approval. Also, keep in mind that oftentimes you cannot transfer balances within the same issuer. This is not an absolute rule, but it is a factor to keep in mind as you're applying. 
• Initiate the transfer: There are generally two main options when it comes to balance transfers — electronic transfers or transfers using convenience checks. Convenience checks are the blank checks that may come in the mail with your credit card. Read your card's terms for exact information on how to initiate a balance transfer on a business credit card. 
• Wait for approval: It can take up to a couple of weeks for a balance transfer to be approved, so be sure to check your account regularly to stay up to date.

Pros and cons of a business credit card balance transfer

As with most things, there are both pros and cons when you transfer personal credit card debt to a business card. 

Pros 

Depending on your situation, there may be several reasons a balance transfer might be appealing to you: 

• Reduced interest: Moving your balance from a card with a high interest rate to one with a 0% APR introductory window could save you money on interest. 
• Business expense consolidation: Transferring business expenses from a personal credit card to a business credit card can help keep business expenses all in one place. This can help business owners track and document expenses more easily. 
• Positive impact on your credit score: Moving your personal debt to a business credit card may have a positive impact on your credit score. If your business credit card doesn't report to the major credit bureaus, then your personal debt will decrease which may boost your score. 
• Higher limits: Business credit cards often come with higher limits than personal credit cards, so by opening a business account you may find your business has more spending power. 

Cons 

While a balance transfer can seem like an attractive option, it helps to also be aware of some of the potential downsides it may have: 

• Transfer fees: There is often a fee that comes with balance transfers. Make sure you have the funds to pay this fee before going ahead with a transfer. 
• Potential to backfire: If you are unable to pay off your debt before the introductory 0% APR ends, you may find yourself paying more in interest. Business cards often have higher interest rates than personal cards. 
• Temporary score reduction: Opening a business credit card may impact your credit score. The transfer will show as a new account on your credit report, which may temporarily affect your score.

In summary

If you've racked up personal credit card debt while getting your business established, a business credit card balance — which lets you transfer that personal balance to your business credit card — may help you save money on interest while also providing a way to keep personal and business finances separate. It helps to be aware of the balance transfer fees, however, and ensure that your new card has a high enough limit to take on your debt.